The Rise of Evernote: An Interview with CEO Phil Libin (Part 2)

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synchronizing across all of them. It’s actually fairly difficult to step up and do anywhere near what we do. So I feel pretty good. I’d rather be running Evernote than any of the other guys.

X: Evernote works particularly well on the iPad. Have you seen your signups increase since the iPad came out?

PL: The iPad app has become very popular. Since it launched in Japan, we are seeing huge numbers coming from Japan. The iPad is almost a perfect device for Evernote. The only thing that would make it more perfect would be a camera; without it, it’s a consumption device. But we’re really excited about the new iPhone, which will be just great for us. And a bunch of Android devices are coming out that are really interesting. We are significantly extending our Android development work—and mobile across the board. We’re starting to spend more money and not trying so hard to conserve. We’re just getting our heads around the idea that we’re not a starving startup.

X: But in the bigger picture, it seems to me that mobile devices are really the clincher for Evernote. The service wouldn’t be nearly as compelling if you couldn’t capture and access data while you’re out and about, doing your daily things.

PL: I think that mobile is very important, and it is definitely the catalyst that has brought about a huge amount of adoption and usage. In daily use, about half of our usage is coming from the desktop, and half from mobile. The ability to have this mobile device always on you, and know that all of your memories are in your pocket, makes it much more useful, even on your desktop.

People are still spending about half their lives sitting in front of their laptop or their desktop computer, so we don’t want to ignore that area. But when we launched, we had a native Windows client, a Web client, and a Windows Mobile client. On an average day back in the summer of 2008, maybe a couple of hundred people would use Evernote from a Windows Mobile device, and 500 on a really good day. But when the iPhone app launched, we immediately had 30,000 users per day from the iPhone. The iPhone fundamentally just broke apart every other mobile platform in terms of how many people know what it is, and having a unified place to get apps. The usage went up by many orders of magnitude. Then we saw the same thing with Android, and with iPad. BlackBerry shot up pretty fast when we launched in the BlackBerry App World, but it’s still nowhere near the same rate of growth as iPhone and Android. Those two are really fundamentally changing the business right now for everyone.

X: Let’s talk about your business model. You have a free version to get people in the door, where users can store up to 40 megabytes of data per month for free, and then if they pay $5 per month or $45 per year they can store up to 500 megabytes per month. Is that model working for you? Are people converting from the free service to the premium plan at a high enough rate to pay for all that storage and to keep your bottom line healthy?

PL: It’s working great. Revenues are growing 15 percent every single month. It’s significantly over projections. Paying for the storage is nothing—it does way more than pay for storage. We have 40 people in the company, and we are living on the revenue.

The main engine is the premium conversions, but two things you said are a little bit wrong. The free version is not a way to get people in the door. Almost nobody hits the 40 megabyte limit; unless you are putting in high-resolution photos, you are just not going to fill it up. We intentionally set it up that way, so that people feel comfortable that they can use the free version forever. It’s full-featured, and we intend the vast majority of our users to always be free.

Our goal is not actually to increase the conversion rate—it is to keep it within fairly narrow bounds. It can’t be too high, because if it is, it means we are dropping users; it means that the premium version is so much better than the free version that the free version is probably not good enough. We are very happy if users use the free version forever and never convert. What happens is that … Next Page »